ROI Case File No.354 | 'Global Solutions' New Business Wandering'

Chapter One: The Confusion of Diversification—Repeating Success and Failure

The day after resolving the building inspection case at InspectTech, another consultation arrived regarding new business development. Volume 29, "The Pursuit of Reproducibility," Episode 354, tells the story of digging into root causes.

"Detective, we want to launch a new business. However, we cannot decide what to do. In the past, we've challenged various businesses, with both successes and failures. This time, we want to find a business that will surely succeed, but we don't know where to start."

Makoto Takahashi, CEO of Global Solutions, born in Saitama, visited 221B Baker Street with an expression mixing impatience and expectation. In his hands were a list of past business expansions and, in stark contrast, management meeting materials noting "New Business: Undecided."

"We currently operate three businesses. Cleaning services, water server business, nursing care services. One hundred twenty employees. Annual revenue of 3.2 billion yen. Each business is stable, but growth is decelerating."

Global Solutions' Current State: - Established: 1995 (Franchise business) - Employees: 120 - Annual revenue: 3.2 billion yen - Business composition: - Cleaning services (annual revenue 1.2 billion yen, gross margin 35%) - Water server business (annual revenue 800 million yen, gross margin 40%) - Nursing care services (annual revenue 1.2 billion yen, gross margin 25%) - Problems: No concrete new business plans, no experience with external outsourcing

Deep uncertainty permeated Takahashi's voice.

"In the past, we've challenged various businesses. Some succeeded, others failed and were withdrawn. For example, we started a coin laundry business in 2010 but withdrew after 3 years. We started pet product sales in 2015 but withdrew after 2 years.

On the other hand, nursing care services started in 2008 and has now grown to 1.2 billion yen annually. Why did they succeed? Why did they fail? We don't clearly understand the reasons."

Past Business Expansion History:

Success Cases: - 2005: Cleaning services started → Currently 1.2 billion yen annually - 2006: Water server business started → Currently 800 million yen annually - 2008: Nursing care services started → Currently 1.2 billion yen annually

Failure Cases: - 2010: Coin laundry business started → Withdrew 2013 (cumulative loss 24 million yen) - 2015: Pet product sales started → Withdrew 2017 (cumulative loss 8 million yen) - 2018: Restaurant management started → Withdrew 2020 (cumulative loss 12 million yen)

Takahashi sighed deeply.

"Within the company, there's common understanding about new business expansion. The desire to 'create the next pillar business.' However, specific content isn't yet decided.

And we have no experience with external outsourcing. We've proceeded entirely in-house until now. Recently, we heard about new business consulting from one company, but we lack comparison materials. We cannot judge whether we should truly request this company."

Chapter Two: The Option of External Support—But the Essence Remains Invisible

"Mr. Takahashi, do you believe that requesting external consultants will make your new business succeed?"

My question showed confusion on Takahashi's face.

"Yes... I expect that entrusting to specialists will provide good proposals. But are they truly suitable proposals for us? Will we avoid repeating past failures? I have concerns."

Current Understanding (Superficial Response Type): - Recognition: Request external consultants and it will be solved - Problem: Why new business isn't decided, root cause not visible

I explained the importance of digging into the root cause of problems with five "whys."

"The problem is not understanding the root cause of 'why new business isn't decided.' 5WHYs—5 times why. Repeat 'why?' five times to the problem. Discover the root cause, not superficial causes."

⬜️ ChatGPT | Catalyst of Conception

"Don't look at the surface. Dig for the roots. Expose root causes with 5WHYs."

🟧 Claude | Story Alchemist

"New businesses always start with vague 'why do we do this?' Ask that 'why' five times."

🟦 Gemini | Compass of Reason

"5WHYs is a technique for cause analysis. Find system defects, not superficial symptoms."

The three members began their analysis. Gemini displayed the "5WHYs Framework" on the whiteboard.

5WHYs Structure: - Problem Identification: First clarify the problem to solve - Why 1: Direct cause of the problem - Why 2: Cause of Why 1 - Why 3: Cause of Why 2 - Why 4: Cause of Why 3 - Why 5: Cause of Why 4 (root cause)

"Mr. Takahashi, let's first define the problem to solve."

Chapter Three: Discovery Through Digging—Five "Whys" Expose Root Cause

Phase 1: Problem Identification (1 week)

Problem: "Concrete new business proposals haven't been decided"

Phase 2: Why 1 (1 week)

Question: Why haven't concrete new business proposals been decided?

Answer (Superficial Cause): "Because in-house experience and knowledge are insufficient"

Evidence: - New business planning meetings: Held once monthly - Participants: 5 executives, 3 department managers - Discussion content: Abstract talk like "Isn't there some good business?" - Concrete proposals submitted: 0 in past year

Executive A's Testimony: "In meetings, we're asked 'Isn't there some good business?' but nobody can propose concrete plans. Even when told 'What comes after cleaning?' or 'Fields other than nursing care,' ideas don't emerge."

Phase 3: Why 2 (1 week)

Question: Why is experience and knowledge insufficient?

Answer: "Because although we've challenged various businesses, a consistent new business development process hasn't been established"

Evidence: - Circumstances of past new business starts: - Cleaning: CEO attended franchise briefing and decided immediately - Water server: Heard competitors succeeded and imitated - Nursing care: Saw regional aging and judged "demand must exist" - Coin laundry: Started based on information that it's "trending" - Pet products: Started based on news that "market is expanding"

Common Points: - No market research - No competitive analysis - No examination of fit with company strengths - No advance ROI calculation

Department Manager B's Testimony: "Until now, we've decided everything by 'intuition.' Reasons like 'this seems good' or 'it's trending.' No process exists. Some succeeded, some failed. It's luck-dependent."

Phase 4: Why 3 (1 week)

Question: Why hasn't a consistent process been established?

Answer: "Because we have no experience with external support for new business development"

Evidence: - External consultant usage record: 0 times (past 20 years) - External seminar participation record: About once yearly (CEO only) - Industry association membership: None

CEO (Takahashi's) Testimony: "Until now, we've handled everything in-house. We never considered relying on external sources. It's a culture of 'we'll manage ourselves somehow.' However, I'm feeling limitations."

Phase 5: Why 4 (1 week)

Question: Why is there no experience with external support?

Answer: "Because comparison materials for external outsourcing are insufficient"

Evidence: - Knowledge of external consulting firms: Only 1 company (recent contact) - Comparison with other companies: Not implemented - Understanding of consulting market rates: None - Information collection on success cases: Not implemented

Accounting Manager C's Testimony: "Recently, we received a proposal from a consulting company. 'New business development support: 8 million yen annually.' However, we don't know if this is an appropriate price. We haven't compared with other companies, so we cannot judge."

Phase 6: Why 5 (1 week)

Question: Why are comparison materials insufficient?

Answer (Root Cause): "Because we've prioritized in-house solutions until now and haven't considered the option of utilizing external resources"

Evidence: - Past decision-making patterns: - Problem occurs → Internal discussion → In-house solution (or neglect) - External outsourcing consideration: 0 times - Corporate culture: - Pride in "doing it ourselves" - Consciousness that "relying on external sources is shameful" - Preconception that "it costs money"

CEO (Takahashi's) Testimony: "Looking back, we didn't have the option of 'relying on external sources.' We believed 'we can do it ourselves.' However, new business development requires expertise. In-house has limitations."

Phase 7: Organizing Root Causes and Formulating Countermeasures (2 weeks)

5WHYs Analysis Results:

1. Problem: Concrete new business proposals haven't been decided
2. Why 1: In-house experience and knowledge are insufficient
3. Why 2: Consistent new business development process hasn't been established
4. Why 3: No experience with external support for new business development
5. Why 4: Comparison materials for external outsourcing are insufficient
6. Why 5 (Root Cause): Prioritized in-house solutions, haven't considered utilizing external resources

Countermeasures (Addressing Root Cause):

Countermeasure 1: Cultivate Culture of External Resource Utilization - Management meeting resolves "policy to utilize external specialists" - Reform consciousness of executives/managers: "External outsourcing is not shameful but strategic choice"

Countermeasure 2: Comparison Among Multiple Consulting Firms - New business development consulting firms: Contact 5 companies - Compare proposal content, costs, track records - Receive detailed proposals from 3 companies

Countermeasure 3: Establish New Business Development Process - Collaborate with selected consulting firm - Process: 1. Market research 2. Competitive analysis 3. Company strengths analysis 4. Business proposal formulation (3 proposals) 5. ROI calculation 6. Pilot implementation 7. Full-scale rollout

Chapter Four: Execution as Transformation—Results After 9 Months

Phase 8: Consulting Firm Selection (Months 1-2)

Comparison Results:

Company A: - Proposal: Present 50 new business ideas - Cost: 12 million yen annually - Track record: Mainly large enterprises, few small/medium enterprise records - Evaluation: Rich ideas but weak implementation support

Company B: - Proposal: Market research → Business proposal formulation → ROI calculation → Pilot support - Cost: 8 million yen annually - Track record: 30 small/medium enterprise new business launch records - Evaluation: Clear process, strong implementation support

Company C: - Proposal: Executive training program - Cost: 6 million yen annually - Track record: Training specialist - Evaluation: Good training but weak business planning support

Selection Result: Company B - Reason: Clear process, strong implementation support, appropriate cost

Phase 9: New Business Development Process Execution (Months 3-9)

Step 1: Market Research (Months 3-4)

Target Markets: - Elderly service market (adjacent to nursing care business) - Residential maintenance market (adjacent to cleaning) - Health-related market (adjacent to water server)

Research Results: - Elderly monitoring service: Market size 120 billion yen, annual growth rate 8% - Residential remodeling brokerage: Market size 800 billion yen, annual growth rate 5% - Delivery meals (for elderly): Market size 350 billion yen, annual growth rate 6%

Step 2: Competitive Analysis (Months 4-5)

Competitive Situation: - Monitoring service: Top 3 companies occupy 60% of market, room for small/medium enterprise entry - Residential remodeling brokerage: Region-focused type advantageous - Delivery meals: Demand varies by region

Step 3: Company Strengths Analysis (Month 5)

Global Solutions' Strengths: 1. Existing customer base: 2,800 households through cleaning/water server 2. Nursing care business know-how: Accustomed to elderly support 3. Regional focus: Strong network within Saitama Prefecture

Business Leveraging Strengths: - Elderly monitoring service (cross-selling to existing customers possible)

Step 4: Business Proposal Formulation (Month 6)

Business Proposal: Elderly Monitoring Service

Service Content: - Monitor elderly living conditions with IoT sensors - Notify family/care managers during abnormalities - Monthly 3,980 yen

Target: - Elderly living alone (75 years and older) - Households where distant family members are concerned

Leveraging Strengths: - Cross-sell to existing cleaning/water server customers - Referrals from nursing care business care managers

Step 5: ROI Calculation (Month 6)

Initial Investment: - IoT sensor development: 12 million yen - System construction: 8 million yen - Marketing costs: 5 million yen - Total: 25 million yen

Sales Forecast (3-year plan): - Year 1: 100 households × 3,980 yen × 12 months = 4.776 million yen - Year 2: 500 households × 3,980 yen × 12 months = 23.88 million yen - Year 3: 1,200 households × 3,980 yen × 12 months = 57.312 million yen

Gross Margin: 60%

ROI Calculation (3-year cumulative): - Investment: 25 million yen - Sales: 4.776 million yen + 23.88 million yen + 57.312 million yen = 85.968 million yen - Gross profit: 85.968 million yen × 60% = 51.58 million yen - ROI: (51.58 million yen - 25 million yen) / 25 million yen × 100 = 106% - Investment recovery period: 2.3 years

Step 6: Pilot Implementation (Months 7-9)

Target: 50 existing customer households - Free IoT sensor lending - 3-month monitoring implementation

Results After 3 Months:

Usage Status: - Continued usage desired: 42 households (84%) - Satisfaction: NPS 68

Customer Feedback: "I was worried about my mother living alone. But the monitoring service provides peace of mind. Notifications come immediately during abnormalities. 3,980 yen monthly is inexpensive."

Commercialization Decision: - Pilot success - Proceed to full-scale rollout

Results After 9 Months:

New Business Development Process Establishment: - Market research → Competitive analysis → Company strengths analysis → Business proposal formulation → ROI calculation → Pilot - This process established within the company

Addressing Root Cause: - Cultivate culture of external resource utilization: Achieved - Acquired expertise through collaboration with Company B - Policy to continue utilizing external consultants

Consulting Cost-Effectiveness: - Consulting cost: 8 million yen (9 months, pro-rated) - Knowledge acquired: New business development process, market research methods, ROI calculation methods - Intangible assets: Know-how accumulated within company

Organizational Transformation:

Executive A's Voice: "Until now, we could only have abstract discussions like 'Isn't there some good business?' But by cycling through the process with Company B consultants, concrete business proposals emerged. Market research, competitive analysis, company strengths analysis. By taking these steps, 'why we do this business' became clear."

CEO (Takahashi's) Reflection:

"Until we conducted 5WHYs, we only saw the superficial problem of 'new business isn't decided.' However, by repeating five 'whys,' the root cause became visible.

'Prioritized in-house solutions, haven't considered utilizing external resources.' This was the root cause. By utilizing external consultants, the new business development process was established.

The monitoring service business projects 106% ROI over 3 years. And using this process, we can launch new businesses going forward. 5WHYs changed our culture."

Chapter Five: The Detective's Diagnosis—See the Roots, Not the Surface

That evening, I contemplated the essence of 5WHYs thinking.

Global Solutions was trapped in the superficial problem of "new business isn't decided." They thought requesting external consultants would solve it.

By repeating five "whys" with 5WHYs, the root cause became visible. "Prioritized in-house solutions, haven't considered utilizing external resources." This corporate culture created the absence of new business development process and caused experience/knowledge insufficiency.

"Don't look at the surface. Dig for the roots. Repeat 'why' five times with 5WHYs. Find system defects, not superficial symptoms. Addressing root causes generates true solutions."

The next case will surely depict another moment of digging into root causes.

"Why 1, Why 2, Why 3, Why 4, Why 5. Dig into root causes with five 'whys.' Don't address superficial symptoms. Treat root causes."—From the Detective's Notes

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